This year’s presidential race underscores a curious truth about American politics today: Elected officials love to talk about “family values” and “invest- ing in our kids,” but shy away from proposing anything big or new that would actually help them. The only item in President Bush’s new budget directed at parents is a call for making his temporary increase in the child tax credit (from $600 to $1,000) permanent. His Democratic challengers have offered a few modest ideas, such as universal after-school programs ($4 billion a year). Compare these budget-conscious pro- posals to the bidding war now underway for the senior vote. President Bush recently signed a Medicare prescription-drug benefit that will cost $400 billion-oops, make that $534billion- over the next 10 years. Preliminary estimates of the program’s long-term cost in current dollars range up to $8 trillion, or more than four times the entire federal budget. Democrats complain the benefits are far too skimpy and should be yet hundreds of billions of dollars higher.
What explains the relative parsimony towards those who nurture children? Not voting power. According to the 2000 presidential election exit polls, parents with children under 18 accounted for 39 percent of all votes cast. By comparison, persons over 65 accounted for only 14 percent. If we presume that politicians know how to count votes and read polls, the only explanation seems to be that most voters–probably even most parents–don’t think that those who nurture the next generation are unfairly burdened. Indeed, many voters have something like the opposite sense. “Don’t we all pay school taxes to support their kids?” they say. “If they can’t afford children, they shouldn’t have them.” Some go even further. In her book The Baby Boon, Elinor Burkett charges that “handing out goodies to parents just because they are parents is affirmative action—the preferential treatment of one group designed to correct real or perceived discrimination or inequality—based on reproductive choice.”
What is behind these attitudes? By tradition, of course, parents have been responsible for the cost of their own children. Moreover, in recent times, widespread fear of and resentment at population growth has fostered the perception that parents are just another kind of selfish consumer, and that we would be better off with fewer of them–particularly if they are of another race or ethnic group. Thus, it seems to many people that any assistance parents receive in raising their children–public schools, tax credits, family allowances–is a form of subsidy. As the economist Nancy Folbre has lamented, the common notion is that children are like pets. “Parents acquire them because they provide companionship and love. Therefore, they should either take full responsibility for them, or drop them off at the pound.” The analogy goes further in the popular mind. Just as dog owners are expected to use pooper scoopers, observe leash laws, and not ask for subsidies, parents are expected to potty-train their children, keep them quiet and well behaved, and let the joys of parenting be their own reward.
The problem with these attitudes is that they fail to account for the deepening dependency all people have on both the quantity and quality of other people’s children. We live, to begin with, in an aging society. In this society, we have largely socialized the cost of aging through programs like Social Security and Medicare. The financing of these programs depends critically on each new generation being larger and better educated than the last. The American Social Security system, for instance, assumes that the number of workers paying into the system will increase by 30 percent over the next 80 years. And it assumes that our children and grandchildren will be enormously more productive than today’s workers.
Yet we still leave it to individuals to bear (in both direct expenses and foregone wages) nearly all of the growing cost of raising the children who sustain the system, while allowing those individuals to retain a dwindling share of the value they create. According to the United States Department of Agriculture, a typical middle-class family will spend over $200,000 in direct expenses to raise a child born this year–not including the cost of college. Then there is the growing opportunity cost of raising children. A mother (or father) who stays at home or accepts a family-friendly, part-time job to be with the kids often sacrifices substantial income. Even for families with modest earning potential, the opportunity cost of raising a single child through age 18 can easily exceed $1 million.
All of us benefit hugely from such parental investment. What could you buy with your Social Security check, or your I.R.A.s for that matter, if everyone else in your generation had simply forgotten to have children or had failed to invest in them? Yet parents do not receive any greater pensions than non-parents for the sacrifices they make to raise and educate the future workers upon whom we will all depend in old age.
We also live in an increasingly knowledge-based economy in which the formation of human capital becomes increasingly essential to all sectors. Yet again, we leave the cost of amassing this human capital primarily in the hands of individual parents and low-paid caregivers and educators, nearly all of whom could vastly increase their incomes simply by getting out of the “nurturing business.” Many are, as attested to by the high divorce rate, the growing shortage of caregivers and qualified teachers, and above all by the dwindling fertility of the American people. Birthrates among native-born Americans are now well below the levels needed to replace the population and are dropping precipitously among immigrants as well.
These two trends—the mounting costs of caring for a growing elderly population and the increasing importance of human capital to the economy—have fundamentally altered the economics of family life. To put it bluntly, childrearing is fast becoming a sucker’s game. Though the psychic rewards remain, the economic returns to individual parents have largely disappeared, while the cost of parenthood is soaring. To those raised on fears of overpopulation, this may seem like a good thing. But a society that is consuming more human capital than it produces is clearly living beyond its means. Not only do the high costs and low rewards of parenthood imperil the future of Social Security, Medicare, and other entitlement programs, but they also undermine the very foundations of our economic system.
Where do doctors come from?
A hospital is a good place to start considering how this is so. More so than steel mills, hospitals require a high concentration of responsible workers and highly trained specialists. They require doctors whose formal education extends into their 30s. They require highly trained, multi-tasking nurses with adept social skills. They require administrators and bureaucrats who are masters of law, regulation, and data management. Even the low-skilled workers who distribute the hospital meals and disinfect the bedpans must be highly trustworthy, for if they do their job wrong, patients will die.
What is true of hospitals is also increasingly true for the workplace as a whole. The clear tendency of economic development is towards a more knowledge-based, networked economy in which decision-making and responsibility are increasingly necessary at lower levels. In such economies, children often remain economically dependent on their parents well into their own childbearing years because it takes that long to acquire the panoply of technical skills, credentials, social understanding, and personal maturity that more and more jobs now require. Conversely, the rising demand for higher education means that more and more people are not even done with school before their own fertility (or their partners’) begins to decline.
The growing economic necessity of prolonged education is easily documented. In the United States, the wage advantage of people with 16 or more years of schooling over those with just a high-school diploma skyrocketed from about 45 percent in 1980 to more than 66 percent by 1990. Since then, the economy has been demanding an even more highly-educated workforce, as shown by the growing income gap between those with college degrees and those with graduate school education. In 1981, holders of advanced degrees (including M.B.A.s, M.D.s and J.D.s) as a group enjoyed no greater income than those with only a college education. By 1997, the economy rewarded advanced-degree holders with 34 percent more income than mere college graduates.
But where do these highly-educated professionals come from? Human capital does not just spring into being, nor is it simply a product of higher education. Doctors, for example, must first be born. Doctors must also, for many years, be swaddled, fed, and comforted–by someone. Prodigious human effort is further required to teach them to read their first sentence and to add their first sums. Indeed, teaching them to read almost always requires far more adult effort and pedagogical savvy than teaching them biochemistry, the latter of which is usually performed in large lecture halls by teaching assistants and junior faculty members. Moreover, because doctors must be trusted with highly technical life-and-death decisions, they had also better acquire a strong sense of morality, a balanced personality, sober habits of living, and discipline–all of which will most likely require vast commitments of time and money by parents and other nurturing adults.
Yet the adults who sacrifice the most to create and mold this precious human capital, whether they be dutiful parents, daycare workers, school teachers, camp counselors, or even college professors, retain only a small share of the value they create. Indeed, as a rule, the more involved one becomes in the nurturing of the next generation, the less compensation one is likely to receive. Those who devote themselves full time to raising their children receive no wages. Daycare workers take home less pay than hotel maids. Elementary school teachers could easily make more money as casino dealers. Camp counselors could raise their income by taking a cashier job at the mall. High school teachers would receive more money if they taught stock or real estate seminars. The highest-paid college professors are those who teach the least. Even among doctors, pediatricians generally receive far less compensation than specialists dealing with adult illness.
Or, to take another example, becoming a nursery-school teacher in most states requires one to have a minimum of an associate’s degree with a major in childhood development, to have mastered a certification exam, and to have served as a student teacher. Nonetheless, the average annual wage of nursery school teachers in 2001 was just $20,940. By comparison, the average wage for animal trainers that year, according to the Bureau of Labor Statistics, was $27,280.
Does this disparity prove that teaching a dog to sit is more valuable to the economy than teaching the alphabet to a future worker? Clearly, it does not. Indeed, the opposite is true, and increasingly so: As the population ages, and as the economy makes ever more intensive use of human capital, those who work at forming this capital are ever more valuable to all members of society. Simply by having children, parents provide the raw material for tomorrow’s workforce, as well as a brake on the aging of the overall population. Then parents, assisted by other caregivers and educators, transform this raw material, through a process that sometimes takes as long as 30 to 35 years, into the next generation of labor.
The returns to society—if not to individual parents, caregivers, and educators—are huge. Businesses receive an input of new workers who arrive on the labor market already endowed with unprecedented amounts of human capital, almost all of it formed and paid for by others–individual parents, who receive no compensation from their children’s employers, as well as scores of caregivers and educators who could have earned far more money doing something else. As these new workers are also new consumers, businesses receive another benefit in the form of increased demand for their products. Governments, meanwhile, harvest an expanded tax base, allowing their beneficiaries, such as Social Security and Medicare recipients, to receive bigger benefits than they otherwise could.
It’s a wonderful system, but for how long can it continue if the cost of being a dutiful parent continues to grow? As more and more of the human race finds itself living under urban conditions in which children no longer provide any economic benefit to their parents, but are rather costly impediments to material success, people well adapted to this new environment will tend not to reproduce. And many others who are not so successful will imitate them, and for good reason.
Consider that in the past, parents bore the full cost of raising their children but also held on to most of the resulting return. How so? To begin with, children as young as 5 or 6 started paying dividends to the household economy by performing economically useful work such as tending farm animals, stitching clothes, gathering wood, or in the early industrial age, working in factories. Young children were particularly valuable in colonial America. In explaining the rapid economic growth in England’s American colonies, Adam Smith noted in The Wealth of Nations: “Labor [in North America] is so well-rewarded that a numerous family of children is a source of opulence and prosperity to the parents. The value of children is the greatest of all encouragements to marriage. We cannot, therefore, wonder that the people in North America should generally marry very young.”
As young adults, well-bred children also often benefited their parents by entering into strategically arranged marriages that brought new wealth and station to the extended family or secured alliances with rivals. Moreover, the majority of parents who were engaged in a common enterprise with their children, such as running a farm or craft shop, derived a direct and exclusive reward for whatever work skills they taught their children, or had others teach them. Finally, adult children provided their parents with at least the prospect of support in old age, which was then, for most people, nearly impossible to secure from any other source.
The system had many brutal features that no egalitarian would wish to replicate, but it did at least allow parents to reap what they sowed. Today’s parents, by contrast, recapture little if any of the return created by their investment in children, even though they typically invest much more, and for much longer, than did parents in the past. At least in developed countries, the economy provides little opportunity for children to perform useful work, even in the rare circumstances in which it is legal. With the end of arranged marriages, few parents in developed countries make strategic gains from alliances with their children’s in-laws; where they do so, it is simply by chance. Moreover, except in the now rare instances in which a son or daughter joins a family business, parents must now be content to see the job skills they provided for their children go not to the benefit of a common enterprise but to the benefit of employers outside the family.
Finally, and just as importantly, parents no longer hold a unique claim on their children for support in old age. Instead, the state, primarily through programs like Social Security and Medicare, redistributes an ever-increasing share of the human capital parents create to all members of society.
As economist Shirley P. Burggraf has pointed out: “People who never have children; parents who neglect, abuse or abandon children; deadbeat parents who don’t pay child support, all have as much claim (in many cases more) on the earning of the next generation through the Social Security System as do the most dutiful parents.” Similarly, corporations that profit from skilled labor, or that sell to affluent consumers, appropriate the human capital created by parental investment, while paying parents nothing in return.
So, how is it that parents, caregivers, and educators continue to receive such a small share of the value they create? One explanation, of course, is that this is all overwhelmingly “women’s work,” and that, therefore, broad sectors of society (including men but also many women employed in the “masculine” economy) devalue it. Another factor, in my opinion, is that we (men and women alike) do not want parents or helping professionals to be “in it for the money.” We want them to be motivated as much as possible by a genuine desire to serve others. Thus, the logic for offering them only minimal financial compensation or even status: It helps to ensure that the people who assume these roles will be disproportionately motivated by idealism, or so we hope.
Yet the low pay and low status of those involved in nurturing human capital is not a sustainable arrangement. The problem is not that parents as well as other caregivers and educators are any less idealistic than in the past. Arguably, those who continue to perform these roles are more idealistic than ever, since there are so many more opportunities available to them than in the past.
Instead, the problem is that the value created by the “nurturing sector” of the economy, if you will, is being taxed away to the point that it makes less and less sense for individuals to invest or participate in it, and so, increasingly, they don’t. The initial result is a below-replacement-level fertility rate. The eventual result, if the trend continues to run its course, is an exhaustion of human capital—a harried, overworked society in which there are too few people to support the old or tend to the young.
What does this tax on nurture look like in day-to-day experience? A young woman faces a choice between becoming a nursery-school teacher, a vocation she admires but pays $7 an hour, and getting a license to be a casino dealer, a calling she finds less noble but that pays $20 an hour. Is society really trying to tell her that she’ll add more value to the world as a casino dealer than as a teacher? No, nearly everyone (even high-rolling social conservatives like Bill Bennett) would agree that a qualified nursery-school teacher plays a more important social and economic role than does a qualified casino dealer. But the problem is, if a nursery school paid her $20 an hour to teach, few parents could afford the tuition, even if she proved to be extremely effective.
And why is that? It is in large measure because almost all of the economic return on that tuition would go not to the parents who paid it, but would be divvied up by society as whole 20 to 30 years later. If you send your child to a high-quality, high-cost nursery school, you may substantially increase the chances that your child will grow up to be a well-adjusted, highly-prized employee who pays lots of taxes. The same may well be true if you sacrifice your own wages to home-school the child. But either way, you will receive little or none of the economic return on your investment, which means you can afford to invest far less in your child than if an ever larger share of those returns were not appropriated by others.
The same relation applies to the cost of college and all child-related expenditures. Who would bet in a casino in which, even when you were lucky enough to hit the jackpot, you had to share the winnings with all the other customers? Maybe a few gamblers motivated by pride and the sheer joy of winning, but most gamblers would take their business elsewhere. The answer suggests one big reason why casinos offer better pay than nursery schools. Customers of both face long odds of success. But if you use your money to play in a casino, you get to keep what you win, while if you use your money to invest in your child’s education, or even in the education of someone else’s child, whatever economic returns follow wind up being shared by everyone. Under these terms, customers will push money at casinos to the point of casinos becoming highly profitable. But nursery schools almost never enjoy a surplus because the value they create is too diffuse. Parents are repaid, if ever, only with pride and joy.
Fortunately, there are still many parents for whom pride and joy in their children is enough. Fortunately, too, even as the percentage of voters who are parents declines, the public is still willing to bear the cost of public education, even if it still resists any entitlement to preschool. Yet looking to the future, we can anticipate that even as demand for human capital continues to increase, this very process will threaten its own supply.
The overwhelming reason America is becoming an aging society is not because people are living substantially longer than in the past. Since 1950, life expectancy at age 65 has increased by just 3.45 years in the United States, and for women, it has actually declined slightly since the early 1990s. Instead, the primary reason there are fewer and fewer workers to support each retiree is that the birthrate has dropped precipitously over the last generation.
In 2002, the “crude” birth rate in the United States as a whole, or the number of babies born for every 1,000 U.S. residents, reached a record low, having declined by 17 percent since 1990. This trend is primarily due to the aging of population, which leaves fewer women of reproductive age, and to an increase in the number of women delaying motherhood until their late 30s or early 40s, when the chances of infertility are high. The last year in which white Americans had enough children to replace themselves was 1971. Fertility rates among blacks meanwhile are falling faster than among any other racial or ethnic group, with the average African-American woman now bearing only 0.1 children more than the average white woman. Because infant mortality is some 137 percent higher among blacks than whites, and life expectancy at all ages is shorter, the black population of the United States is probably not creating enough babies to reproduce itself.
Among major ethnic and racial groups, only Hispanics are still reproducing above replacement levels, and that is primarily because of the comparatively high fertility of recent arrivals, who are themselves having fewer children. Nationally, the average Hispanic woman of childbearing age produces fewer and fewer children each year, the rate per thousand having dropped by more than 10 percent since 1990. A continued increase in the percentage of women going to college or graduate school, as well as continued social and economic progress for African Americans and Hispanic Americans, could well push this rate down further. According to the National Center for Health Statistics, “A woman’s educational level is the best predictor of how many children she will have.” Declining fertility among Hispanic women in California, which is driven primarily by gains in educational attainment, have put the state on a course in which it could easily see its population of children aged 0-10 decline by 585,000 between 2000 and 2010.
What are the economic consequences? Falling fertility, to be sure, offers many benefits–at least at first. As the relative number of children declines, so does the burden of their dependency, thereby freeing up more resources for investment and adult consumption. The general improvement in America’s economic performance since the 1970s has been due in part to the era’s low fertility. Fewer babies meant there were more women available to work for wages. Similarly, the “middle aging” of America that occurred in the 1990s helped increase the average wage and measured productivity growth, as a rising percentage of the population aged into years in which most individuals are at the peak of their job performance and earning power.
Yet even if declining fertility rates can bring a “demographic dividend,” that dividend eventually has to be repaid. At first there are fewer children to feed, clothe, and educate, leaving more resources for adults to enjoy. But soon enough, if fertility continues to remain below replacement levels, there are fewer productive workers as well, while there are also more and more dependent elderly, who each consume far more resources than children do. Even after considering the cost of education, a typical child in the United States consumes 28 percent less than the typical working-age adult, while elders consume 27 percent more, mostly in health-related expenses.
Eventually, as the pool of potential mothers diminishes, and as young people find more and more of their income going to support the old, both population loss and economic stagnation become nearly inevitable. Younger workers, finding not only that the economy requires them to have far higher levels of education than did their parents, but also that they must pay far higher payroll taxes, are less able to afford children and so have fewer of them, causing a new cycle of population aging. This in turn requires still more taxes to finance, thereby making the cost of children even less affordable, while also further diminishing the economy’s ability to provide jobs for those young people that are left. Today, due largely to the crushing cost of pensions and health care, the oldest countries of “old Europe,” such as Spain and Italy, have economies that produce double-digit youth unemployment rates, despite a theoretical shortage of youth. In Japan, the combination of a rapidly growing older population and a dwindling supply of new workers has caused what Yamada Masahiro of Tokyo Gakugei University has called “low birth rate recession” –which has now lasted for more than a decade and that could grow much worse as the population of Japan contracts in absolute numbers.
Adding to the viciousness of the aging cycle is a gradual loss of innovation and entrepreneurialism. In 2002, for example, Babson College and the London School of Business released their latest index of entrepreneurial activity by country which shows a distinct correlation between a nation’s high ratio of workers to retirees and a high degree of entrepreneurship. Thus, for example, India and China. which stand among the most entrepreneurial countries on earth, deploy roughly five people of working age for every person of retirement age. Meanwhile, Japan and France rank among the world’s least entrepreneurial nations, displaying some of the lowest worker-to-retiree ratios. Countries such as the United States, Canada, Italy, and Germany have levels of entrepreneurial activity that correlate closely to the ages of their populations.
Many factors may go into this correlation. One, of course, may be that aging workers and investors tend to be less flexible and more risk averse. Both common sense and a vast literature in finance and psychology support the claim that as we approach old age, we become more reluctant to take risks with our careers and nest eggs. It is not surprising, therefore, that aging countries such as Japan, Italy, and France are marked by exceptionally low rates of job turnover and by exceptionally conservative use of capital.
Because prudence suggests that older investors take less risk with their investments, we can expect that as populations age, investor preference will shift toward safer bonds and bank deposits and away from speculative stocks and venture funds. As populations age further, we can expect an ever higher share of citizens to be cashing out their investments and spending down their savings, neither trend being consistent with a future marked by high levels of high-risk investment in new technology.
We must also consider the huge public deficits projected for major industrialized countries over the next several decades. The mounting costs of pensions and health care will bring government R&D expenditures and educational spending under increasing budgetary pressure. Moreover, massive government borrowing could easily crowd out capital that would otherwise be available to the private sector for investment in new technology. Projections by the Center for Strategic and International Studies show, for example, that today’s old-age benefit promises will eventually consume an additional 12 percent of GDP a year in the typical developed country. As CSIS reports: “Were these imbalances permitted to accumulate, by the mid-2020s, budget deficits in the rich countries would consume all of their savings, making them dependent on capital flows from the Third World to fund domestic investment. Long before this happens, of course, capital shortages and default risks would spill over and disrupt growth everywhere.”
Under these circumstances, one might imagine that liberals and conservatives would be scrambling to come up with new policies to encourage fertility and ease the burden on families, yet instead, both camps remain mired in a 30-year culture war that ignores the new realities of global aging. On the one side, of course, we meet the objections from religious and social conservatives wary of working mothers and viewing daycare and other social services that might benefit working parents as an encroachment by the “nanny state.” Thunders National Review editor Richard Lowry: “The mass entry of women into the workforce has acted to dissolve the family in general.” Neoconservative intellectual Francis Fukuyama warns that “substantial empirical evidence links higher female earnings to both divorce and extramarital childbearing.” There are also plenty of people who object to the idea that they should have to pay more taxes so that dual-income yuppies or Murphy Brown-type single moms can have an entitlement to free daycare. When not making their case on moral grounds, they cite an avalanche of studies on the health and developmental risks to children in daycare. Business interests, meanwhile, consistently oppose any mandate that would require them to pay parents who need time off to take care of an infant or a sick family member.
The anti-natalism of the Left is just as important in explaining the status quo. Many early socialists and feminists put great emphasis on promoting family life and on getting the state to relieve mothers of part of their risks and burdens. Yet by the 1960s, the idea that mothers should be rewarded for giving “a citizen to the nation” was already coming to seem dangerously outdated. Betty Friedan set the tone of the modern feminist movement when, in the first chapter of The Feminine Mystique, she tellingly fretted about the ongoing “population explosion.” She then famously went on to describe how the typical American mother was smothering her children and helping to create a “comfortable concentration camp” that made both sexes neurotic.
Since then, Friedan’s argument that over-mothering was causing male homosexuality to spread “like murky smog over the American landscape” has lost resonance on the Left. But her general critique, that motherhood should not be a woman’s highest calling or priority, has not lost its following. And so the preoccupations of modern feminism, and of the Left in general for the last generation, have been with issues of personal liberation, birth control, abortion, and access to the market economy.
Accordingly, the idea that either mothers or fathers deserve unique compensations and protections has dropped off the progressive agenda. Instead, with rare exceptions, today’s Left has joined with market libertarians in de-romanticizing motherhood and family life, while at the same time sharing a celebration of hyper-individualism and maximum competition in labor markets. This ideological cocktail relieves capitalists from having to pay anyone a family wage, as they more than happily watch working mothers and fathers scapegoat each other over who is now responsible for the children.
And so the culture wars over work and family result in today’s tough bargain for parents: Everyone who wants to may join the paid labor force, but almost no one gets a family wage or enough help from government to defray the costs of raising children. Employers, and the majority of citizens who are not actively involved in raising children, benefit from this status quo, which is why, no doubt, it has continued for so long. Dutiful parents do not benefit, which is why there are fewer of them.
Yet as we have seen, in the long term, the cost of this bargain is not just the harried, downwardly-mobile life faced by most of today’s parents. A falling birthrate and an aging population have consequences for every member of society that will soon become more and more apparent. The context of the debate over work and family today is a world in which most people still view population growth with alarm, and simply take it for granted that large numbers of mothers and other caregivers will always be available to raise children for little or no wages. But these mass opinions will shift, and probably quite rapidly, as the reality of aging sets in. The critical moment will probably come in the next decade, as millions of Baby Boomers start crashing past the boundaries of old age, and as today’s teenagers find themselves saddled with massive student loans, rising taxes, and growing frustration over the increasing difficulty of forming or affording a family. It is none too soon to begin thinking about how the politics of work and family will then change, and about what policies could save the day.
Veterans of household wars
What might such solutions look like? One way to short-circuit the current culture war debate would be to propose substantial tax relief and extra benefits to married parents who successfully raise their children. For example, consider this bargain? Have one child, and the payroll taxes you pay (and which your employer nominally pays) drop by one-third. A second child is worth a two-thirds reduction. Have three or more children, and never pay payroll taxes again until your youngest child turns 18. When it comes time to retire, your Social Security benefit (and your spouse’s) will be calculated just as if you had both been contributing the maximum Social Security tax during the period in which you were raising children, provided that all your children have graduated from high school. For most parents, this would mean an increase in Social Security benefits over what they would receive today. To pay for it all, benefits to non-parents would have to be reduced.
Notice first that the proposal would at least reduce the “double taxation” parents face under the Social Security system. The system appropriates much of the human capital parents create by investing in their children and then requires them to contribute payroll taxes as well. The proposal offers an equitable remedy for this double burden. Notice, too, that this proposal is of no benefit to households in which no one works. It does not create an incentive to have a child just to get a check, as the old welfare system used to. At least one parent must be holding down a job with taxable income for this tax relief to be of value, and the same is true if one is to receive a higher retirement benefit.
Notice, also, that this proposal does not create a vast new child welfare bureaucracy, nor allow government to dictate what is the best way to raise a child. Instead, it puts more resources in the hands of individual parents, who decide for themselves how best to raise their children. This means that the family with a stay-at-home mom doesn’t have to pay extra taxes just so the dual-income yuppie couple across the street can be entitled to free daycare. But neither do two-paycheck families wind up having to pay extra taxes to support the stay-at-home mom with any kind of government check. Instead, all parents receive a substantial increase in household income, which they can then use to pay for more, and higher quality, childcare and education–if they like, or just to compensate themselves for the income they forgo by staying home with the children.
Of course, it would be foolish to suppose that money alone can explain a question as subtle and mysterious as what motivates human beings to procreate and invest in their children. Sweden, in the early 1990s, did manage to boost its fertility rates by offering more generous family allowances, but has since seen births drop far below replacement levels, as well as an explosion in single-parent households. Equally crucial is a cultural recognition of the increasingly critical role dutiful parents and other caregivers play in sustaining the human capital of an aging society. No, we don’t need to put mothers up on pedestals or reinvent paterfamilias. But as in the case of military service, it makes a big difference if society recognizes (not just with money, but also with prestige) the sacrifices individual parents make on all our behalf.
Government mandates that reservists not lose their jobs when they are called to duty and offers them free health care and pensions. Only the churlish consider these benefits to be a subsidy or suggest that patriotism should be its own reward. Yet when it comes to guaranteeing that parents don’t lose their jobs for doing their duty, too often we are told that this is just another form of welfare or affirmative action.
In reality, both soldiering and nurturing children are vital forms of public service. One is a traditionally male calling and the other female, which may well explain why veterans enjoy a panoply of benefits and their own cabinet-level agency, while mothers don’t. But in the long run, both roles are vital to a nation’s survival, with the new realities created by aging and the deepening demand for human capital formation making successful parenting all the more so. A society that fails to recognize, much less honor, its debts to those who form the next generation may expect to vanish.